Common shares of Eletrobras, as the Rio de Janeiro-based
utility is known, rose 6.1 percent to 30.78 reais, the most
since June 19. CPFL increased 5.3 percent to 33.80 reais, the
steepest gain in a year.

Goldman Sachs Group Inc. boosted Eletrobras to “buy” from
“neutral,” citing the company’s measures to control costs at
its subsidiaries.

The changes “are bringing investors’ attention back to
Eletrobras,” analyst Francisco Navarrete wrote in a note.
“Eletrobras’ discount in multiples versus peers is excessive.
If at any stage, fundamental change occurs at the company,
upside could be considerable.”

CPFL Upgrade

CPFL, Brazil’s largest private-sector power distributor,
was raised to “buy” from “hold” at Raymond James &
Associates Inc., which cited the company’s outlook for growth
and industry consolidation.

Residential and commercial demand “growth should be aided
next year by strengthened sales in auto, real estate, and
consumer related sectors; a stronger employment market;
increased availability of credit at relatively low rates for
historical standards, etc,” Ricardo Cavanagh wrote. The
Raymond James’s analyst also estimates rising demand from the
industrial segment as production tends to increase.

“We are seeing the recovery of the commercial, residential
and industrial consumption, full water reservoirs and commitment
by corporations to contract power supplies,” Filipe Lopez,
analyst at Agora Corretora, said in a phone interview from Rio
de Janeiro. “The scenario for the power utilities industry is
positive, there’s nothing bad about it, and in addition to that
the companies pay good dividends.”

CPFL pays about 95 percent of net profit in dividends,
according to Cavanagh. Eletrobras will probably solve a 10
billion-real late dividend issue by March, Itau Securities
analyst Marcos Severine said Nov. 27.